CSO Schanzer of Undertone Networks Says Online Metrics Today Don't Support Long Term Needs Of A Brand

AdExchanger.com: Of the four ad solutions you provide according to your website (Display Ads, Synched Ads, Undertone Video and Full Page Ads), which is the fastest growing and why? Any surprises or trends that you've seen in 2009?

AS: We are seeing growth in most of our higher impact units including all forms of video, rich media and a new product which allows a user to connect an ad or offer directly to a mobile device, Web based calendar, Twitter stream or social media environment. This growth is being driven by brand and direct response marketers who seek both impact and performance and are interested in experimenting online beyond the basic banners with units that have TV characteristics (site, sound, motion) but aren’t necessarily a replication of TV creative.

In a recent Advertising Age article, it was noted that Undertone will refund a campaign as much as $50,000 if impression quality slips. How do you determine quality? Please provide an example. Have you made any refunds yet?

Undertone does not acquire inventory through an ad exchange or from other questionable sources. Each publisher in our network must be professionally produced, provide a blend of the ad units we deliver, and offer above-the-fold inventory. The publishers that meet that criteria are scored based on the quality of the layout and the content to ensure a safe, well lit environment for brands that want performance without sacrificing quality and control. Publishers that meet the Undertone Qualified Publishers (UQP) requirements are further analyzed based on their ability to deliver brand or direct response objectives.

We issued the Undertone Quality Guarantee(SM) to help clients make sense of all the noise in the market. Too many networks tout quality and appropriate placements yet few can deliver on that. The Guarantee was about raising the ante and showing clients that accountability matters. What is most interesting is that since announcing the Guarantee, not a single network has followed suit or offered anything of its kind.

Will real-time bidding (RTB) or demand-side optimization play a part in Undertone's strategy in the future? It seems like a behavioral marketer's dream given the data intensive model.

We are currently investing in technology that will make the Undertone network seamless and easy to use for third parties to "bolt" on and work with us. This will extend through demand and sell side systems. A real-time bidding system is not in the plans as the nature of our inventory is not best utilized this way.

Trading platforms and systems such as Invite Media and Media Math are aggregating exchange and publisher inventory and beginning to enable agencies and ad networks. How does Undertone meet this challenge?

Undertone has and is continuing to invest in inventory management and optimization systems that will compete head on with trading platforms from a performance standpoint, however, we are not concerned with long tail or remnant inventory. We are carving out a secondary media marketplace that is focused on quality and performance and is best suited for brands that need a certain level of confidence and protection. Undertone will stay very focused on this position, along with a suite of quality products to deliver our value to marketers and agencies. Data, analytics and such play a critical role, but let’s not forget we are still in a service business where clients are looking for more than just algorithms. We are focusing considerable effort on this.How do you assure your publisher network that you are not cannibalizing their inventory?

Undertone is a strong proponent of publishers direct to agency sales channel. We do not provide transparent site by site reporting and defend that position vigorously. As a result of a direct to publisher buying model, Undertone's inventory and pricing is marketplace driven by supply and demand side economics for secondary inventory. With a much smaller set of publishers, Undertone is able to establish specific rules of engagements with publishers that may govern who and when our sales teams can target. Our goal is to provide incremental monetization to the publishers’ direct efforts – never channel conflict.

One of the best things we can do for publishers is to help them drive additional revenue by leveraging their strengths. Our new product called U360 will do that and we are excited about the response we have already seen in the market.

What has been Undertone's experience with data exchanges? Do you use them? Do they provide ROI?

Undertone has successfully used data exchanges and is now expanding its partner list to include vertical data sets where appropriate. Beyond providing positive ROI, well vetted exchanges provide access to clean opt-in data that scales across segments and categories. We are releasing products that will increasingly leverage third party data and help make access to data in large volume simple and effective for agencies and marketers.

In your opinion, why is it taking so long for brand awareness campaigns to come online?

It’s a big scary leap for brand marketers to move away from proven TV based models that go back 20, 30, even 50 years. The transition needs to be slow because the metrics today don't necessarily support the long term needs of a brand, and traditional econometric models don’t do a good job of capturing and attributing online exposure to sales and/or brand success.

The answer will come as research and metrics evolve. Not so much away from CPx but away from the very short term view we have today that looks at success over weeks and perhaps months (if you are lucky) and move toward measures that define the value of online communications to the long term growth and success of a brand.

Are your clients running display with their search campaigns? If so, have they seen any boost in overall ROI?

Generally speaking, display advertising creates demand which provides lift to search efforts, certainly lift to the number of searches conducted for a brand, keyword or phrase. We recognize the value of synchronizing efforts between display and search to drive results but don't spend a lot of time thinking about it given the significant impact other, typically offline channels, will have on these results.

Does search retargeting offer significant promise in increasing ROI and interest in the display market? Has Undertone tried Yahoo's offering or will it?

Undertone offers search retargeting from a landing page which is one step further down the funnel toward sales or desired actions. The ROI for these efforts is extremely positive. We have not tried Yahoo’s product.